https://ecfr.eu/publication/the-infinit ... or-happen/
The initial memorandum of understanding for IMEC – signed by the United States, the European Union, France, Germany, Italy, India, the United Arab Emirates, and Saudi Arabia – envisioned two sections: an eastern maritime link between India and the Gulf, and a northern section that would connect the Arabian Peninsula to Europe. These would be connected by a new railway network to link the Gulf with the Mediterranean via Jordan and Israel. Beyond the transport infrastructure, undersea cables would facilitate the exchange of data, while long-distance hydrogen pipelines would boost the participants’ climate and decarbonisation goals.
European Commission president Ursula von der Leyen hailed the pact as “nothing less than historic”. India’s prime minister Narendra Modi said IMEC would be “the basis of world trade for years to come”, while US president Joe Biden called it “a really big deal.” Saudi Arabia’s Crown Prince Mohammed bin Salman echoed Biden almost verbatim, stating “it is a big deal for us, and for Europe [and] for India”. The parties set themselves a deadline of 60 days to put forward more detailed plans for IMEC’s implementation.
February 2024 saw India and the UAE sign the first formal agreement on the corridor’s development and France’s president Emmanuel Macron appoint a special envoy on IMEC. At the Raisina Dialogue in New Delhi later that month, the Greek prime minister Kyriakos Mitsotakis stressed the importance of the corridor and the need to better connect the EU with India. As Modi said at Raisina, “this is an inter-generational project, and it would be a mistake to see it through the prism of any one event or conflict.” These small signs of activity bode well for a return to formal planning involving all the main parties.
The BRI’s most significant artery to date is perhaps the China-Pakistan Economic Corridor (CPEC). This road and rail corridor runs from the Gwadar and Karachi ports in the Gulf of Oman to Islamabad and then on to the Chinese border town of Kashgar. Parallel to the transport route, Beijing has invested in extensive energy infrastructure including coal power plants, gas pipelines, and wind farms. Through CPEC, Beijing aims to create a strategic avenue for Chinese trade on the Pakistani coast, avoiding the sea trade chokepoint of the Malacca Strait that connects the Indian and Pacific oceans. While its benefits for Pakistan’s economic growth are questionable, China has acquired significant political influence in the country.
In this way, China has established political and economic leverage in countries across the world and constrained its rivals. But, notwithstanding the importance of these political gains, the ten-year scorecard of the BRI is mixed at best: after peaking in the mid-2010s, Beijing’s investment abroad is declining as the country faces mounting domestic economic pressures. And, while the initiative has provided much-needed connectivity in the recipient countries, it has also done so without boosting local, value-added production and has left developing countries indebted to Beijing, meaning many of these countries are now looking elsewhere.
But this 21st century trade route will also feature undersea internet cables and pipelines to transport electricity and hydrogen to Europe and India, produced using renewable sources in the Arabian peninsula.
The agreement to establish IMEC was reached largely thanks to the Biden administration’s diplomatic efforts
, and the project builds on various US interests. Firstly, IMEC reflects the United States’ goal to stabilise the Middle East and sustain the momentum of the Abraham Accords between Israel and Arab countries.
At the same time, IMEC ties in strongly to US attempts to establish a closer political, economic, and security relationship with India, building on the Quadrilateral Security Dialogue with Japan and Australia. It also extends Washington’s 2021 efforts to form the public-private I2U2 group, which sees the US and India cooperating with Israel and the UAE on economic issues.
And it is not by chance that IMEC was announced during a special event on the margins of the G20 about the US-led Partnership for Global Infrastructure and Investment (PGII), a joint G7 effort launched in 2022 to unite existing infrastructure strategies under a single political umbrella.
Part of the European response has been an infrastructure ‘offensive’, largely directed towards the global south. In December 2021, the EU launched Global Gateway, a strategy to leverage public and private investments of up to €300 billion for sustainable infrastructure in developing countries. The initiative has a unifying vision to support the green transition around the world. But so far, Global Gateway has focused on projects decided well before its launch. And, despite the substantial resources the EU has announced for Global Gateway projects (more than €40 billion in guarantees, €18 billion in grants, and roughly €145 billion in previously planned investments from member states’ development finance institutions), the initiative does not involve plans for any new connectivity routes. IMEC could begin to address this lack of innovation and enhance Global Gateway with concrete new investments.
From the European perspective, de-risking is about reducing exposure to China in value chains and limiting vulnerabilities in case of weaponisation of trade. China is by far the biggest source of imports into the EU, representing 20.5 per cent of the bloc’s imports in 2023. This share increases to more than 90 per cent for components vital for the green transition, from solar panels to rare earths. Forthcoming EU legislation such as the Net-Zero Industry Act agreed in February 2024 aims to boost the bloc’s domestic production of key green technologies and reduce its reliance on a single external supplier; while the bloc’s 2023 Economic Security Strategy sets out plans to address supply chain and dependency risks. This also applies to excessive reliance on China as an export market – since the country is a key destination for EU manufactured goods, especially in the automotive and pharmaceutical industries.
The governments of the three EU member state IMEC participants are on board with de-risking and are distancing themselves from Beijing. Germany’s 2023 Strategy on China lays bare the government’s concerns about Beijing’s role in its supply chains; German naval deployments in the Indo-Pacific also support the de-risking agenda, establishing the basis for greater economic and security cooperation with India. The French Indo-Pacific Strategy, meanwhile, calls for a diversification of suppliers and a reduction in dependencies via greater cooperation with actors in the region. Indeed, it is from this perspective of economic security and resilience that French policymakers largely view their own participation in IMEC.[1] The third member state, Italy, has opted out of its participation in the BRI and views IMEC both as a tool to increase exports to India and to underpin the role of Italian construction firms in Indian infrastructure.
In the private sector, European and US firms are diversifying away from China in their investment decisions, with India rising as a primary destination of investments in new facilities. Between 2021 and 2022, European and US foreign direct investments announced for greenfield developments in India almost quadrupled, increasing by $65 billion. India is attracting a growing share of investments in the semiconductor, electric vehicle, and battery industries – which favour its location, large workforce, and expanding economy.
The Mediterranean stretch of IMEC largely overlaps with that of the planned EastMed-Poseidon pipeline – a joint initiative from Italian energy firm Edison and the Greek company DEPA International Projects that would transport Israeli and Cypriot natural gas to Greece and then Italy. If the EU could incorporate this 2,000km pipeline into the IMEC plans and complement it with the corridor’s transport connections, it would have a mutually reinforcing effect: EastMed would no longer be a standalone project but part of a strategic corridor, while the pipeline would ground IMEC’s energy component in reality.
The EU has included the EastMed pipeline in its list of “projects of common interest” (a set of infrastructure projects the bloc deems crucial to its energy and climate goals). But the war in Gaza has delayed the final investment decision from the partners. If approved, the pipeline would take just three years to complete since the preliminary infrastructure has already been deployed.[2] As liquefied natural gas (LNG) shipped from the US and the Gulf has largely replaced Russian natural gas in the EU, a new pipeline gas supply from the eastern Mediterranean such as this would help reduce European exposure to global LNG dynamics. Transporting LNG by ship renders LNG supplies vulnerable to disruption of maritime trade: southern Europe, for instance, is facing delays in deliveries from Qatar due to the crisis in the Red Sea.
A gas pipeline is hardly an investment in the green transition. But EastMed could support European net-zero ambitions if it was constructed as a “transition pipeline”. These pipelines are built to transport progressively high shares of hydrogen in a process known as ‘blending’ (mixing natural gas with hydrogen to create a less polluting fuel). If it is constructed as such, the EastMed pipeline could be used within IMEC to import green hydrogen produced by Gulf countries, which have invested massively in this sector and would be incentivised to do so further. To recover the cost of around €6 billion for the project, suppliers would usually require decades-long gas contracts, which are at odds with European emission targets and current trends in gas demand. Europeans would have to deploy the pipeline for hydrogen as soon as possible to reduce the risks of gas lock-in that could result from the investment. This would enable the EU to limit gas purchases to current European needs; green hydrogen could play a major role in decarbonising EU heavy industry in the future.
IMEC also overlaps with the EU’s Euro-Asia Interconnector – an electricity cable that began construction in 2022 and that mostly follows the same route as the EastMed pipeline, linking the electricity grids of Greece, Cyprus, and Israel. While the cable represents a key component of the EU’s energy resilience in itself, it becomes even more relevant in the context of IMEC’s planned interconnector. This could eventually link up with the EuroAsia cable, enabling Europeans to benefit from the significant potential of the Gulf states in renewable energy production. IMEC would therefore help expand the range of potential suppliers of green energy to Europe, going beyond countries on the southern Mediterranean such as Morocco.
Firstly, there is financing. Even though the EU and its member states would not be required to finance the entirety of the corridor, initial suggestions of $3-8 billion for each section appear to underestimate the true costs by a vast amount. Saudi Arabia has pledged $20 billion, but even that is unlikely to cover a major share. The combined cost of just the Euro-Asia Interconnector and the EastMed pipeline would already amount to half that sum (around $6.5 billion for the pipeline and $3.9 billion for the interconnector). Any new gas or hydrogen pipelines and electricity interconnectors would likely equal or surpass those amounts. Heavy railway lines are notoriously expensive to build, costing a global average of $14.6m per km of track.
Moreover, with Piraeus as the landing point, goods would then embark on a route from Greece, through the Western Balkans, and on to northern and western Europe that currently has limited railway links, forcing some travel by truck. This makes transport less efficient, more polluting, and for long distances hardly any cheaper than current routes. A single European endpoint would also constitute a chokepoint for the corridor, limiting its ability to withstand local shocks or disruptions. European economic resilience would therefore be better served by multiple EU ports receiving IMEC’s flows.
A similar reasoning applies to other sections of the corridor: upgrades of the Israeli port of Haifa have been disrupted by the current war – a powerful reminder of the security threats that loom over that leg of the corridor.
Leaders in Saudi Arabia and the UEA envision an economic future where they would be primary trade hubs for goods travelling between Europe and Asia. They are also working towards diversifying their economies away from their previous dependence on hydrocarbons exports. Abu Dhabi is ahead of Riyadh on this long road – the non-oil sector now accounts for 70 per cent of the Emirati GDP compared to 60 per cent in Saudi Arabia – but the latter is picking up pace through its Vision 2030 strategy. The IMEC plans for green hydrogen pipelines to supply Europe would respond to Gulf states’ ambitions to play a major role in the energy transition and maintain their centrality in future energy markets.
IMEC builds on existing railway initiatives in the Gulf. Specifically, the GCC Railway launched in 2009 that will connect all six GCC states through a network of national and transnational lines. Estimates for the cost of this project were initially around $15.4 billion for roughly 2,117km of railways, due for completion by 2018. Since the very beginning, however, the railway has been beset by delays and cost increases. The Qatar blockade – the 2017-2021 diplomatic crisis when Riyadh and Abu Dhabi blocked most cross border services with Doha – and the covid-19 pandemic then caused the railway to miss an updated 2021 deadline.
But detente among the GCC states and the prospect of IMEC have since provided a boost, and today estimates point to 2030 for the completion of all lines. Unloading goods in the Gulf and moving them on trains through Saudi Arabia, Jordan, and Israel could save between 10-12 days in travel times to Europe compared to shipping alone. IMEC should therefore also motivate the expansion of existing plans into new lines, despite their construction costs and the expense involved in loading and unloading.
Across this leg of IMEC, perhaps the most dangerous tension of all is entirely internal to the GCC. Far from being united in purpose, over the past decade Saudi Arabia and the UAE have become ensnared in a bitter rivalry that touches all domains related to the project. Riyadh’s and Abu Dhabi’s competition for GCC economic leadership increasingly resembles a zero-sum game, in which each strives to maximise its own gains from the corridor while minimising those of its opponent. Saudi leaders promote their own ports, or those of Oman, as alternatives to Khalifah. Riyadh also seems in no hurry to complete the GCC Railway connection with its rival. And Saudi Arabia’s increasing protectionism when it comes to Emirati goods casts a shadow over such essential features of IMEC as regulatory harmonisation and trade facilitation. This all clashes with Emirati leaders' own moves to become the region's primary trade hub and imperils cross-border connectivity.
Regional and international rivalries also play out in IMEC’s digital component. Bypassing Egypt, the corridor largely mirrors the Blue-Raman cable system, an undersea internet connection between southern Europe and India that is currently under construction. This cable would firmly establish the Gulf as the digital anchor linking Europe and India, and IMEC would enhance its strategic value. Blue-Raman’s main investor is Google
One project that could reduce the impact of a future crisis in the Strait of Hormuz is the development of the Duqm-Riyadh railway – already under study – that would link the Western Omani port with the Saudi capital, adding a new entry point less exposed to instability. Europeans should press for these plans to move forward. Bringing Oman on board would also reinforce IMEC’s role as a stabilisation tool since the country has a long tradition of mediating between regional rivals. And the railway could help contain the risks posed by the rivalry between Abu Dhabi and Riyadh.
IMEC’s landing points in Europe would benefit from diversification too. For instance, Europeans should consider adding Marseille in France and Gioia Tauro in southern Italy (where there is no Chinese involvement) as landing points, and consider including the Adriatic coast. These ports would best complement Greece’s majority Chinese-owned Piraeus due to their integration with the continent’s railway network and their capacity to handle large container volumes.